High gas prices fuel the rise of SPP coal-fired electricity as wind production weakens

Strong points

Wind generation down by 47.7 GWh on average in June

Coal market share up to 40% vs. 31% in May

Declining wind generation in the Southwest Power Pool increases the coal market share in the mid-continent of the Americas this month as dual-fuel generators limit consumption of higher-priced natural gas.

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In the territory of the independent grid operator, wind generated an average of 212,900 MWh and captured around 26% of the market share in the generation stack this month. In May, renewable energies generated an average of 260,600 MWh in SPP, or more than 40% of the total market, according to ISO data.

As the wind speed decreases, generators in the center of the continent seem to opt primarily for coal as a backup fuel. In June, coal-fired electricity produced an average of 324,100 MWh, or about 40% of ISO’s output. That’s up from an average of 196,200 MWh and 31% market share last month.

While slower wind speeds and warmer temperatures this month have also boosted power generation and gas market share in SPP, the gains are significantly lower than coal. Higher gas prices are likely to be blamed for the growing boom in coal as a backup fuel in the PPS.

Price, weather, burns

In June, spot prices at mid-continent hubs remained near or above the $ 3 / MMBtu level. At the region’s benchmark upstream location, NGPL Midcontinent, the spot market averaged around $ 2.91 / MMBtu – nearly double the monthly average from last June, according to S&P data. Global Platts.

Rising gas prices limited the rise in electricity consumption in the center of the continent this summer, despite lower wind generation and a similar overall demand for cooling in June compared to last year.

To date, population-weighted temperatures in the center of the continent have averaged 77.8 degrees Fahrenheit, just half a degree below the levels recorded during the corresponding period last June. Gas-fired electricity use in the Midcontinent, meanwhile, has averaged about 1.23 Bcf / d this month, down nearly 275 MMcf / d from last June, according to the data from Platts Analytics.


As futures gas prices continue to rise, the outlook for summer electricity demand in the center of the continent continues to deteriorate.

At market settlement on June 18, the June-July-August NGPL Midcontinent Band stood at $ 3.07 / MMBtu on average, down modestly from the annual high reached earlier in the week at 3.21 $, according to the most recent M2MS data released by S&P Global Platts.

According to a recent forecast from S&P Global Platts Analytics – likely based on lower price expectations – the fuel switch would result in a decrease of less than 100 MMcf / d in the Midcontinent’s electricity use this summer compared to summer. latest. Given the steep drop already experienced this month, switching may result in a much larger drop in summer balance electricity consumption than expected.

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About Lois Mendez

Lois Mendez

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